An investor is thinking of investing in one-year zero-coupon bonds. He is considering investing in either a New Zealand dollar-denominated-bond with a yield 4.25 percent or US dollar- denominated bond with a yield of 2.5 percent. The current exchange rate is US$ 0.6546 per NZS. (a) What exchange rate one year later is the break-even exchange rate, which would make the NZ$ and US$ investments equally good? (4 marks) (b) Which investment would have turned out to be better if the actual exchange rate one year later is US$ 0.6052 per NZ$? (6 mark)